If anyone hasn’t noticed yet, General Motors means business competing against Tesla.
The Detroit automaker has not just beaten Tesla to market with its first mass-market 200-mile EV product, it’s also lobbied when opportunities came along to influence how Tesla gets to sell its products.
To date, the maker of the 2017 Chevy Bolt has been a behind-the-scenes opponent to Tesla’s factory direct sales model in states including Ohio, Michigan, Maryland, Indiana, and Connecticut.
Last week in Indiana, legislation that threatened to force Tesla to go the franchised dealer route – and that which Tesla accused GM of helping to craft – was shelved after legislators cited national press attention, and vocal Tesla supporters putting on the heat.
This week, as Connecticut lawmakers look to a public hearing Wednesday March 2 on proposed legislation that could carve out an exception to franchise laws for the Palo Alto company, GM again finds itself on the front lines standing against Tesla’s ambitions.
The story of Tesla’s bucking the status quo is not a new one, but of all automakers, GM may be the most vocal in making its views known to legislators at pivotal moments.
A rundown of GM’s lobbying interventions shows that while specific issues and laws varied state to state, a common denominator was GM has advocated a “level playing field” for Tesla and competitive auto dealers.
Tesla is unique in that it chooses to be the sole line of manufacturing, distribution, sales, and service for its electric cars made in Fremont, Calif. It has defended this approach saying alternately it must in order to survive, or it simply chooses to citing “free-market principles,” and it’s named other reasons besides.
Most states do have laws on the books enforced by state regulators mandating a third-party owner must be the sales and service side of the distribution channel.
Tesla has won some and lost some, managing in cases to get around rules in certain markets, while in others it has been barred or limited in its operations.
Many implications for the future of the auto business, and billions of dollars, are on the line. GM has stepped in at least five times, each time making headlines as it released quotes taking a stand.
One example was in March 2014, in which Selim Bingol, GM’s senior vice president of global communications and public policy wrote Ohio Gov. John Kasich. GM’s concern was whether Ohio would allow Tesla to expand beyond two Ohio existing storefronts.
Another intervention came in October 2014 when GM wrote Gov. Rick Snyder saying it supported legislation denying Tesla the right to sell in state.
“We believe that House Bill 5606 will help ensure that all automotive manufacturers follow the same rules to operate in the State of Michigan; therefore, we encourage Governor Snyder to sign it,” GM said.
Yet another instance was in April 2015 where GM opposed House Bill 235 prior to its signature by Gov. Larry Hogan.
“While not specific to just Maryland, we also believe all industry participants should operate under the same rules and requirements on fundamental issues that govern how we sell, service and market our products,” wrote GM spokeswoman Laura Toole in an email to AutoblogGreen. “GM plans to compete in the all-electric vehicle market. By enacting HB 235, multiple manufacturers may compete with similarly capable vehicles and similar price points, yet they would operate under a distinctly different set of rules, which is why we opposed HB 235.”
Last week also, in Indiana, House Bill 1254 – called the “kill Tesla” bill by certain lawmakers – was being proposed, and Tesla accused GM of crafting some of the wording of the for-now shelved bill.
“GM is very pleased that we were able to elevate the issue of disparity impacting our dealer partners in Indiana, that this received as much attention as it did, and that this issue advanced as far as it did,” said GM in a statement. “We appreciate the Indiana legislature for taking this on, debating, and helping raise the profile of this important issue, which demonstrates the inequity of different competitors having different rules in the marketplace.”
This week the same refrain continues in Connecticut, the proposed law in question in this case is Senate Bill 3.
This proposed legislation is a renewed push to permit Tesla and other manufacturers to expand their footprint.
Tesla is not specifically named, but the bill championed by legislators including Senate Majority Leader Bob Duff is being widely viewed as pro-Tesla and would permit any electric car company without a physical presence in Connecticut to open up to three dealerships.
According to Westfair Communications, Tesla has already “found ways to circumvent state franchise laws” in Connecticut as it hopes this legislation will go through.
Tesla’s website lists a showroom in Greenwich and reportedly Tesla is in process of requiring permits from the town’s planning and zoning commission.
History of Reacting to Tesla
General Motors former Vice Chairman Bob Lutz once cited the Toyota Prius and the Tesla Roadster as goading him in 2006 to push GM engineers to come up with the extended-range Chevy Volt.
In 2013, GM’s former CEO Dan Akerson tasked a Tesla “watch team” and the same year let on that GM would build a mid-$30,000, 200-mile EV – and it was presumed this was in response to Tesla’s plans for a mid-$30,000, 200-mile “Model E.”
The Chevy Bolt concept revealed January 2015 in Detroit – a date and place Tesla had once suggested its entry level EV would first be shown – was the result of that effort. The “Model E” is late, and to be revealed as the Model 3 at the end of March.
When GM CEO Mary Barra announced the production Bolt this year at CES in Las Vegas, she made a veiled remark poking Tesla as she touted the new EV presented as a mass-market solution.
“We believe strongly in the dealer model,” Barra said. “Unlike some EV customers, Bolt EV customers never have to worry about driving to another state to buy, service or support their vehicle.”
Barra did not name Tesla, but it was clear to hearers to whom she referred, and indeed, at other times Tesla, portraying itself as victimized and needing a break, says the same thing.
“Right now, even test-driving a Tesla requires Connecticut citizens to cross state lines.” said Jim Chen, Tesla’s VP of Regulatory Affairs & Associate General Counsel concerning the penindg Connecticut legislation. “It shouldn’t be so difficult for customers to try, and buy, an eco-friendly car that continues to set the forward-moving trends of the transportation industry.”
In an interview today, General Motors spokesman Chris Meagher reiterated the automaker’s position is not against competition or Tesla, but it does want one set of rules for all car sellers, not special rules made for the California EV maker.
“We are in opposition to the idea of two different sets of laws governing how vehicle manufacturers operate,” said Meagher. “We believe in robust competition in the emerging electric vehicle marketplace. We welcome competition, we just believe that all interests participating should operate under the same rules and requirements on issues that determine how we sell, service and market our products.”
Tesla, it has been reported, could enjoy an unfair advantage, which Meagher also commented upon.
“It creates an uneven playing field,” he said, adding franchise laws stand to provide a measure of consumer protection.
“I think that these franchise laws were created to provide protection for the consumer, and auto dealers provide a vital function for consumers so this is a benefit for consumers as well.”
As a video by the National Auto Dealer Association’s getthefacts.org website shows, Meagher’s comments are not unique to GM, and it is a fact regulators have insisted on accountability as a public safety issue. Dealers who are invested locally to the tune of millions of dollars have been seen as having a financial interest in providing service if they wish to remain competitive.
The notion also of dealers being available to back products over and above the manufacturer – even one that may go out of business as is a risk for Tesla – has also been a talking point.
One of Tesla’s objections has been that dealers have an “inherent conflict of interest” to sell EVs when they have other conventional products they may steer them to.
This was answered by Texas auto dealer association president Bill Wolters a couple years ago. Tesla is locked out in that state, but Wolters said several very successful dealers have offered to build a Tesla-only showroom, as palatial as Tesla would wish with a hand-picked owner of Elon Musk’s choosing to eliminate the conflict against selling Tesla.
Upon hearing this, Meagher acknowledged Tesla does have options.
“The fact of the matter is Tesla could open up a franchised dealership in Connecticut today if they wanted to,” he said in response to this scenario, “but they insist on the state first providing them with unique rules and exceptions to suit their business interest.”
Not GM Only
Sources not willing to be quoted have said other automakers are at least sympathetic if not as outspoken as GM. The automaker’s views are otherwise in line with those who’ve more-clearly stood against Tesla – state and national auto dealer associations.
In Connecticut this week, one off-the-record source said to keep an eye open to what vested interests also comes out in opposition to rules that would benefit Tesla.
Requests for comment by Tesla and Ford on these issues were not answered before deadline.
Immensely Complex Issues
Other stakeholders, including those of state dealer associations, have also said concerns over dealer franchise laws are not just about Tesla, but worries have been voiced over Chinese or other interests riding in on precedents that may be set.
While EV advocates and those sympathetic to the storyline as they understand it have been known to get hot under the collar on Tesla’s behalf, it should be noted beyond what has been written here, the issues are deep and broad.
The nuanced complexity underlying state dealer franchise laws is beyond the scope of this article, and although reports have boiled it down to allegations of “greed” and “hypocrisy,” although there may be truth in this, there is more to it than that.
Often sound-bite journalism repeats talking points, which may be all that can be done in limited time, and to an audience of potentially limited attention span, but readers would be encouraged to delve deeper.
So, while it may be easy for some to point an accusing finger at GM, it is certainly not alone in what it is doing.
It just so happens as mass-market EVs are poised to expand the market, it may be the most outspoken among automakers, as it looks to compete now and in the years ahead on a “level playing field.”